Continued product innovation, direct consumer relationships, investments in supply chain management will benefit industry in coming year
ROSEMONT, IL (Jan. 7, 2019)–Coming off another successful year, many housewares executives say the industry is in a good position to weather whatever challenges come its way in 2019. While the possibility for substantial new tariffs on goods from China continues to loom large, many top executives plan to continue to innovate, develop direct relationships with consumers and invest in supply chain management to benefit their companies in 2019 and beyond.
“Certainly, there are a lot of external factors bombarding us right now,” said Thom Nichols, president of Pretika Corporation. “But look at all the new product launches still taking place (in our industry). Our willingness to still put capital behind new products, to still invest in our retail partners….it’s ongoing. I think that’s a testament to the nature of entrepreneurialism in our industry.”
Robust Sales in 2018
Global housewares spending rose to $364.2 billion, an increase of 2.5 percent, in 2017 – the most recent available statistics, according to IHA’s 2018 State of the Industry Report. In the U.S. alone, housewares expenditures increased 5.2 percent from the year before.
Anecdotally, it seems 2018 will end up another solid year for housewares sales. “The tax and regulation changes were very good for the economy and from our perspective, these tended to be real positives for both business and the consumer,” said Howard Steidle, CEO of John Ritzenthaler Co.
“The current economic environment does mean an active market for housewares products, as well as the opportunity to introduce products with greater design features and functionality at higher retail price points,” said Steve Greenspon, CEO of Honey-Can-Do International LLC.
Consumer spending at core retail continued to climb through November of 2018 (the last available data), according to the United States Commerce Department.
Possibility of New Tariffs Looms Large
However, the many executives who source goods from China are closely watching the status of U.S.-China trade talks and weighing the possibility of additional tariffs.
“It’s a very challenging environment with a lot of moving parts,” said John Collins, International Housewares Association (IHA) chairman of the board and president/CMO of Neatfreak Group. This uncertainty especially becomes a factor when having to quote prices to retailers for future orders.
If there are additional tariffs, many executives say they have contingency plans in place. Some have already started to launch pre-emptive efforts where they’re able, including pushing factories for lower costs, changing materials, moving production to other countries or temporarily de-emphasizing product categories originating from China.
More Cost Pressure
Separate from tariffs, cost pressure is coming from many different directions. Increasing prices for raw materials, ocean freight and labor were all factors in 2018, and are expected to continue in 2019 as well.
“We saw a little relief with currency, though it was not enough to offset increases in raw materials, freight, labor and the first round of tariffs,” said Greenspon.
Michael Stoll, president of UT Brands, cited dramatic increases in the cost of transportation and many of his products’ raw materials. “At some point, we will have to pass these costs on to the consumer,” he said. “Tariffs (just may be) the straw that breaks the camel’s back.”
Reinvention of Retail
On a positive note, many housewares executives are enthusiastic about the reinvention of brick and mortar retail, their ability to connect directly with consumers online and new opportunities for growth in e-commerce.
“Seeing Amazon execute retail brick and mortar space should be an encouraging sign that the consumer will always value the physical presence of products,” said Lisa Knierim, president & CEO-Americas of Villeroy & Boch. “I also believe in-store technology and experiences could be game-changers for several retailers.”
“Traditional brick and mortar retailers that have invested in e-commerce should begin to get traction (in 2019),” said Scott Henrikson, president of Dexas International Ltd. “We should see further contraction of some retail channels, while e-commerce, off-price, and others should continue to grow.”
“I believe consolidation will continue, with some retailers failing but perhaps a new retailer coming to light that addresses new consumer trends,” added Bill Endres, president of Select Brands.
Selling Environment Evolves
At the same time, the proliferation of social media and their own investments in e-commerce platforms means housewares suppliers are better able to connect directly with consumers.
“The biggest single shift (in our business in recent years) is disintermediation,” said Collins. “The implications of a consumer being able to buy directly from us are very far-reaching.”
Collins said the continued development of e-commerce also brings suppliers new opportunities for growth. That includes selling through newer platforms like Alibaba, which is now the 4th largest retailer in the world, as well as many social media platforms that are looking for new ways to monetize.
Opportunities in Supply Chain Management
“With retail customers not readily willing to hold inventory as in years past, nor provide forecasts, it has become incumbent on the manufacturer to take the risk in the supply chain,” pointed out Yvette Laugier, managing director of Peugeot Saveurs North America LLC.
Several suppliers said they’re investing in their drop-ship capabilities to help support their retail partners’ e-commerce needs. Nichols said Pretika for one is also working to improve its own supply chain management so they don’t have to maintain large inventories, allowing them to utilize their capital better.
Products from these executives’ companies and more than 2,200 other exhibitors from around the globe will be on display at the 2019 International Home + Housewares Show March 2-5 at Chicago’s McCormick Place Complex. Show information and badge registration is available at www.housewares.org/show/register-plan.